Why No Banksters Have Been Prosecuted

When Charles Ferguson accepted the Academy Award in 2010 for his documentary film Inside Job, he told 30 million people viewing the award ceremony that “three years after a horrific financial crisis caused by massive fraud, not a single senior financial executive has been prosecuted and that’s wrong.”
Two years later, still no prosecution.

So, now Ferguson is out with a book – Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America (Random House, 2012.)

It reads like an indictment.

Check that.

It reads like a number of indictments.

And Ferguson is hoping that federal prosecutors will pick up the book and get some ideas.

And why exactly have there been no prosecutions of high level Wall Street investment bank executives?

Politics?

“Not exactly,” Ferguson says.

“It’s important to bear in mind the direct personal incentive structures of many of the people involved,” Ferguson told Corporate Crime Reporter last week. “The revolving door phenomenon now effects the Justice Department and federal prosecutors to a very substantial extent.”

“The previous federal prosecutor for the southern district of New York, Mary Jo White, now does white collar criminal defense and makes a great deal more money than she did as a federal prosecutor. I think that phenomenon is very well entrenched, very thoroughly entrenched.”

“Indeed Lanny Breuer, the Assistant Attorney General for the Criminal Division was head of the white collar criminal defense practice at Covington & Burling. They represent most of the major banks and investment banks in the United States.”

And his boss, Eric Holder, the Attorney General, came from the same firm.

“Exactly,” Ferguson said. “So, when you say politics, you sort of think of Republicans, Democrats, ideology, large scale political and policy debates. I don’t think that’s the only thing going on here. I think you have to consider incentives – individual, personal, financial and professional.”

When Rudy Giuliani was U.S. Attorney, he had no qualms about prosecuting Michael Milken. What has changed?

“One thing that has changed is that the amount of wealth and political power held by the financial sector has gone up by at least an order of magnitude,” Ferguson said.

“Another thing that’s changed is the amount of money that the financial sector spends on politics and acquiring political power and influence has also gone up by at least an order of magnitude.”

“And thirdly, the divergence, the difference between public sector salaries and incomes and private sector salaries and incomes has widened enormously.”

“So again, for those at the level of large scale political behavior and at the level of individual incentive, things have changed dramatically since the 1980s.”

As an undergrad, Ferguson studied mathematics at the University of California Berkeley and went on to study political science at MIT.

He then went on to organize an early software company – Vermeer Technologies – which was sold in 1996 to Microsoft for a reported $133 million.

He was an early fan of President Obama.

“I donated my legal maximum to his campaign in 2008,” Ferguson says.

But at a press conference in October 2011, Obama addressed the question of why no high level Wall Street executive has been prosecuted.

“So, you know, without commenting on particular prosecutions– obviously, that’s not my job, that’s the attorney general’s job – you know, I think part of people’s frustrations, part of my frustration, was a lot of practices that should not have been allowed weren’t necessarily against the law, but they had a huge destructive impact,” Obama said.

Does Ferguson still support Obama?

“I’m now very troubled,” Ferguson said. “I’m going to vote for him because we face only two realistic choices, him and Mitt Romney, and between the two, I still think that, for various reasons, he is by far the better choice. He is the lesser of two evils and I can’t say that I will vote with any happiness.”

Are you going to donate the legal maximum this time?

“I haven’t decided what I’m going to do,” Ferguson said. “I certainly would find it emotionally difficult to donate money to his campaign given my feelings about the situation and his conduct.”

What was Ferguson’s reaction when he heard Obama say – the actions “weren’t necessarily against the law”?

“My reaction was very negative,” Ferguson said. “First of all the statement is thoroughly inaccurate and incorrect, but secondly it’s very difficult for me to believe that he doesn’t know that.”

“Given what we now know, it’s very difficult for me to believe that President Obama actually believes that there was no significant criminality in the housing bubble and the financial crisis.”